Toyota . . . A global market leader, tying itself in knots

“I know that you believe you understand what you think I said, but I’m not sure you realize that what you heard is not what I meant.”

I almost hate to return to the subject of Toyota, but occasionally I read something that just plain makes my head hurt. This is one of those times.

An article in the New York Times (“Millions of Toyotas Recalled, None in Japan”) discusses the plight of Japanese Toyota customers who allegedly have experienced unexpected acceleration problems. The article cites veterans of Japan’s consumer rights movement, who say that these customers are the victims “. . . of a Japanese establishment that values Japanese business over Japanese consumers, and (of) the lack of consumer protections here.”

In response to these allegations, the article notes that while Toyota has recalled eight million cars outside Japan because of unexpected acceleration and other problems, it has insisted that there are no systemic problems with its cars sold in Japan.

What causes my head to hurt?

It’s a simple question that keeps running through my mind. Is Toyota telling customers in its North American and European markets that it produces problematic vehicles for distribution in the rest of the world, or is it telling its domestic market that it takes better care of consumers in North America and Europe than it does at home?

In a global marketplace and an era of instant communication and social networking, absolutely nothing will destroy the public’s trust in – and the credibility of – a brand faster than potentially contradictory messaging.

Perhaps what I understood I thought Toyota said is not what it really meant.

But my head still hurts.

Toyota: “The first duty of love is to listen”

Here are some further thoughts on the continually emerging story of Toyota and its potentially lethal acceleration problems.

As I noted in an earlier blog, a company’s customer service department should be its “canary in the coal mine”, giving early warnings of problems so management can act. This type of communication is always a two-way street. Companies must give their customer service people a big megaphone and an important platform to spread the word. It also has an obligation to listen.

Adding credence to those observations, here are a couple of examples that help illustrate the point.

The first comes from a very recent article in the Wall Street Journal. That story questioned why Toyota waited nearly 6 months to introduce a fix for its acceleration problems in the U.S. after it had announced a similar fix for its cars in Europe. The Journal’s report is based on comments made during the course of a February 5th news conference with Toyota's quality chief, Shinichi Sasaki, and CEO, Akio Toyoda.

During the course of that news conference, the Journal notes:

“Answering the question of why Toyota didn't move sooner the fix for the pedals in the U.S., Mr. Sasaki also referred to "coordination" between engineers and people collecting consumer feedback on products as a possible factor that stretched out the time needed for a response. He didn't elaborate further.”

The Los Angeles Times noted that one of industry’s internationally recognized software engineers, Steve Wozniak, co-founder of Apple, apparently didn’t have either a megaphone or a platform of sufficient size to grab attention. The Times reports that “Woz”, owner of a 2010 Prius, experienced acceleration problems – up to 97 m.p.h. -- when he attempted to use his cruise control to increase the car’s speed.

The Times article goes on to report:

“Wozniak, 59, wanted to alert Toyota Motor Corp. and the National Highway Traffic Safety Administration to the possible safety issue, but he grew frustrated when no one would listen.”

Love is a term that’s regularly been associated with the Toyota brand. Owners “love” their cars, and the company that makes them. The company professes to treat its customers “lovingly”.

However, as theologian and philosopher Paul Tillich once noted,

“The first duty of love is to listen.”

Toyota and Google: When You Lose Your Teflon Coating

Teflon is a brand name for a “non-stick” coating used on cookware – among many other products. However, in the early 1980’s, the term began to be used to describe public figures to whom criticism does not seem to stick. First applied to Ronald Reagan, it has also been used to describe a range of public figures including “Teflon Tony” (Blair)”, former British Prime Minister.

These public figures share some common attributes. They have spent long periods of time building up impeccable public reputation – at least for certain critical attributes. They are charismatic leaders. Their supporters are fiercely loyal, often overlooking serious flaws.

The term “Teflon” can also be aptly applied to companies and brands. We have two examples now immediately before us: “Teflon” Toyota and “Teflon” Google.

Toyota has spent decades around the world – and, closer to home, in North America – building a sterling reputation for the overall quality and economy of its vehicles. The search engine Google, a relative newcomer by comparison, has earned its dominant position on the strength of its core product (algorithms that are acutely and almost instantaneously sensitive to changes in its users) and its growth is almost a fairy tale success story.

Both companies have recently stumbled.

Google’s misstep involves the launch of the company’s first venture into its own cell phone, the Nexus One. Google sells the phone itself; wireless service is provided by T-Mobile. The Nexus One has been the subject of an early wave of consumer complaints about connectivity, early termination fees, touch screen problems and poor customer support from Google itself.

For Toyota, the issue involves massive product recalls for two related and allegedly serious safety defects involving sticking accelerator pedals.

For Google, the brand damage is probably both minimal and fairly easily correctable. This is likely so simply because the problem doesn’t relate to customer problems with the company’s core product, its search engine and related services.

For Toyota, the allegations go to the very heart and soul of the company’s products; accordingly, the brand damage is serious; it may take a long time to overcome this setback.

How do brands get into this kind of pickle?

I think this has to do with a form of hubris, a term normally applied to people, not large, faceless corporations. However, it is critical to remember that, even the largest corporations are simply groups of individuals focused toward a common task. As such, they have all the same human character strengths and weaknesses. In addition, the organization’s sense of shared experience can amplify both the best and worst of those human characteristics.

Highly successful corporations, like highly successful politicians, rise to the top by being the absolute best at what they do – and by skillfully managing their “brand”, passionately focusing on quality and developing a sterling reputation for leadership and performance.

Over time, particularly as the public repeatedly overlooks minor (and not so minor) performance issues, the organization may come to rest on its laurels. That may be true when that corporate culture is continually being reinforced by public and expert acclaim.

Customer service departments should be a corporation's “canary in the coal mine” – staying in the closest daily touch with customers and sending a “shout out” up the corporate ladder when a problems first begin to surface.

In the case of Toyota, it may be that the canary’s reports were so incongruent, so inconsistent with the company’s sense of itself and its reputation (and the problems not easily identified or replicated), that the internal, institutional response was to believe too much in the brand’s reputation and ignore that annoying canary. The reported acceleration issues – involving many Toyota models – go back several years and have been variously attributed to floor mats, the pedal itself and even the software that is now integral to all vehicles from all manufacturers.

In the case of Google, the answer is somewhat simpler. There weren’t any (or, in fairness, not enough of the right kind) canaries in the coal mine. There were undoubtedly problems with the new phone (as with any new product launch), and the problems were shared between the device itself and the carrier. Whatever the initial issues were that triggered the customer’s search for help, they soon became secondary to the truly vexing problem – either being bounced back and forth between T-Mobile and Google, or by not being able to obtain the help they expected from Google.

In 2004, the management consulting firm, McKinsey and Company, reported on a study of over 20,000 complaints filed with the nations’ Better Business Bureaus against all major wireless carriers. One fact stood out. According to an article in the August 2004 issue of McKinsey Quarterly by Adam Braff and Serena Leogue, one of the greatest sources of customer dissatisfaction did not flow from any root cause of actual dissatisfaction with phone service, such as poor coverage or limited handset choices, but from the carrier's response (or lack of response) to problems. Braff and Leogue concluded their article by observing that “. . . given the tremendous benefits of heading off intense customer dissatisfaction, companies should recognize the high cost of patching up these problems down the road and instead attempt to prevent them.”

No one should lose sight of this fact. These two companies have earned their “Teflon” by performance and success over time. Both must be given a chance to recover.

For Google, the road forward appears considerably easier. A February 2 article in PC World reports that “After struggling to support Nexus One customers using an online-only approach, Google appears to be developing a phone customer service operation.” While a spokeswoman for Google would not confirm this, the company is advertising for a phone support manager for Android (the Google proprietary software system) and Nexus One.

For Toyota, the full financial and brand impact of this issue is still to be calculated. Most industry insiders believe it will take years to recover from the global impact.

Three lessons from these issues seem inescapable (and they are particularly applicable to “best of class” companies):

• Never rest on your laurels; the next brand challenge may be a phone call (or a “tweet”) away;
• Your customer service department should not be an apologist; it is your most “real time” connection with your customers – your canary in the coal mine. Build it, fund it, staff and train it as if your brand depended on it. Because it does.
• When the canary sings, for heaven’s sake – listen.